ACIT, Bangalore v. Shri. Jaspal Sawhney, Bangalore

ITA 730/BANG/2010 | 2004-2005
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 73021114 RSA 2010
Assessee PAN AAAPS6738F
Bench Bangalore
Appeal Number ITA 730/BANG/2010
Duration Of Justice 1 year(s) 5 month(s) 27 day(s)
Appellant ACIT, Bangalore
Respondent Shri. Jaspal Sawhney, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-11-2011
Date Of Final Hearing 17-11-2011
Next Hearing Date 17-11-2011
Assessment Year 2004-2005
Appeal Filed On 28-05-2010
Judgment Text
PAGE 1 OF 8 ITA NOS.729 & 730/BA NG/2010 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BEFORE SHRI N K SAINI ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K JUDICIAL MEMBER ITA NOS.729 & 730/BANG/2010 (ASST. YEARS 2003-04 & 2004-05) THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1(1) BANGALORE. - APPELLANT VS SHRI JASPAL SAWHNEY SHOBHA TORQUOISE 3A HAUDIN ROAD ULSOOR BANGALORE-47. - RESPONDENT PA NO.AAAPS 6738 F DATE OF HEARING : 17/11/2011 DATE OF PRONOUNCEMENT : 25/11/2011 APPELLANT BY : SMT. SHEETAL ADVOCATE RESPONDENT BY : SHRI ABHAY KUMAR SINGH ADDL. CIT O R D E R PER GEORGE GEORGE K : THESE TWO APPEALS INSTITUTED BY THE DEPARTMENT ARI SE OUT OF SEPARATE ORDERS OF THE CIT(A)-XXIII NEW DELHI BOTH DATED 30/03/2010. THE RELEVANT ASST. YEARS ARE 2003-04 AND 2004-05. 2. SINCE COMMON ISSUE IS INVOLVED IN THESE APPEALS AND THEY PERTAIN TO THE SAME ASSESSEE THESE APPEALS ARE DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. PAGE 2 OF 8 ITA NOS.729 & 730/BA NG/2010 2 3. THE REVENUE HAS RAISED SEVEN GROUNDS IN EACH OF THESE APPEALS. HOWEVER THE SOLITARY ISSUE THAT ARISE FOR OUR CONSI DERATION IS WHETHER THE ASSESSMENTS CONCLUDED ARE BARRED BY LIMITATION SINC E NO NOTICE U/S 143(2) HAS BEEN SERVED ON THE ASSESSEE WITHIN THE TIME STI PULATED. 4. BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- THE ASSESSEE IS AN INDIVIDUAL. HE IS IN THE BUSI NESS OF EXPORT OF PROCESSED GRANITES. RETURN OF INCOME FOR THE ASST. YEAR 2003-04 WAS FILED ON 2.12.2003 DECLARING TAXABLE INCOME OF RS.38 68 0 80/-. DUE TO NON- COMPLIANCE OF NOTICES THE AO PROCEEDED TO FRAME TH E ORDER U/S 144 OF THE ACT VIDE ORDER DATED 10.3.2006. THE TAXABLE INCOM E WAS FIXED AT RS.97 75 350/-. THE AO DISALLOWED CERTAIN EXPENDIT URE CLAIMED AND ALSO THE DEDUCTION U/S 80HHC. 4.1 FOR THE ASST. YEAR 2004-05 RETURN OF INCOME WA S FILED ON 30.10.2004 DECLARING TAXABLE INCOME AT RS.37 19 710 /-. SINCE THERE WAS NO ALLEGED COMPLIANCE TO THE NOTICES U/S 143(2) AND 14 2(1) ASSESSMENT WAS CONCLUDED U/S 144 OF THE ACT VIDE ORDER DATED 27.12 .2006. 5. AGGRIEVED BY THE BEST JUDGEMENT ASSESSMENTS COMP LETED FOR THE ABOVE SAID TWO ASST. YEARS THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 6. THERE WAS A DELAY IN FILING THE APPEAL BEFORE TH E FIRST APPELLATE AUTHORITY. THE DELAY IN FILING THE APPEAL WAS CONDON ED AND THE CIT(A) PROCEEDED TO DISPOSE OF THE ISSUE ON MERITS. THE F IRST PLEA TAKEN BY THE PAGE 3 OF 8 ITA NOS.729 & 730/BA NG/2010 3 ASSESSEE WAS THAT NO NOTICE U/S 143(2) WAS SERVED O N THE ASSESSEE AND HENCE THE BEST JUDGEMENT ASSESSMENT IS ILLEGAL VO ID AND DESERVED TO BE QUASHED. 7. THE CIT(A) DECIDED THIS LEGAL ISSUE IN FAVOUR O F THE ASSESSEE AND HELD THAT ASSESSMENTS FOR THE ABOVE SAID TWO AS ST. YEARS ARE BAD IN LAW. THE CIT(A) RELYING ON THE CATENA OF JUDICIAL DECISIO N HELD THAT THE AO WAS DUTY BOUND TO ISSUE AND SERVE THE NOTICE WITHIN THE STIPULATED TIME AND HAVING FAILED TO DO SO THE ASSESSMENTS CONCLUDED A RE NOT IN ACCORDANCE WITH LAW. THE CONTENTION OF THE AO THAT SHRI SUNIL ARO RA C.A. APPEARED ON 24.12.2004 AND THEREFORE IN THE LIGHT OF PROVISION S OF SECTION 292BB OF THE ACT IT IS TO BE HELD THAT THE NOTICE WAS DULY SERVE D WAS ALSO REJECTED BY THE FIRST APPELLATE AUTHORITY. THE RELEVANT FINDING OF THE CIT(A) FOR THE ASST. YEAR 2003-04 READS AS FOLLOWS:- 19) FROM THE CATENA OF JUDICIAL DECISIONS DISCUSSED ABOVE THERE CAN BE NO DOUBT THAT IN THE CASE IN HAND THE LEARNED AO WAS DUTY BOUND TO ISSUE AND SERVE THE NOTICE BY 31.12.2004 AS THE ASSESSEE HAD FILED RETURN OF INCOME U/S 139 ON 2.12.2003. IT IS CLEAR THAT WHEN THE ASSESSEE HAD FILED RETURN OF INCOME THE ADDRESS GIVEN WAS A-63/3 SFS DUPLEX FLATS SAKET NEW DELHI. THE LEARNED ASSESSING OFFICER IN A BONAFID E MANNER ISSUED THE NOTICE U/S 143(2) ON 3.12.2004 AN D SENT THE SAME BY POST. THE ENVELOPE CONTAINING THE NOTICE RETURNED UN-SERVED WITH THE POSTAL REMARKS LEFT WITHOUT ADDRESS. IT CANNOT BE DISPUTED THAT AT TH IS JUNCTURE THE ASSESSEE HAD NOT INTIMATED HIS BANGAL ORE ADDRESS (NEW ADDRESS) TO THE LEARNED AO. NOR WAS T HERE ANY INTIMATION TILL 31.12.2004 WHICH WAS LAST DATE FOR ISSUANCE AND SERVICE OF THE NOTICE ON THE ASSESSEE. THE RIGHT COURSE OF ACTION FOR THE LEARNED AO SHOULD PAGE 4 OF 8 ITA NOS.729 & 730/BA NG/2010 4 HAVE BEEN TO SERVE THE NOTICE BY AFFIXATION U/S 282 OF THE ACT ON THE LAST KNOWN ADDRESS AFTER FOLLOWI NG THE PRESCRIBED PROCEDURE. THIS WOULD HAVE BEEN A VALID SERVICE OF NOTICE WITHIN THE TERMS OF SECTION 1443(2) AND SECTION 282 OF THE ACT. INSTEAD THE LEARNED AO CHOSE TO SERVE THE NOTICE ON M/S AJAY SET HI & ASSOCIATES WHO WERE AUDITORS OF THE ASSESSEE AND NOT AUTHORIZED TO RECEIVE THE NOTICE ON BEHALF OF THE ASSESSEE. 20) IN THE REMAND REPORT THE LEARNED AO HAS POINTED OUT THAT SHRI SUNIL ARORA CA APPEARED ON 24.12.2004 AND THEREFORE IN LIGHT OF PROVISIONS OF SECTION 292BB THE NOTICE SHOULD BE CONSIDERED AS D ULY SERVED. I AM AFRAID THAT THIS CANNOT COME TO THE R ESCUE OF THE REVENUE. I HAVE NOT BEEN MADE WISER BY THE REMAND REPORT WHICH WOULD SUGGEST THAT SHRI SUNIL ARORA CA WAS INDEED AUTHORIZED TO RECEIVE THE NOTI CE AND REPRESENT THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS TAKEN THE STAND THAT THE SAID SHRI SUNIL ARORA CA FROM AJAY SETHI & ASSOCIAT ES HAD NEVER BEEN ISSUED THE POWER OF ATTORNEY. THEY HA D BEEN APPOINTED AUDITORS FOR PURPOSES OF SECTION 44A B AND 80HHC OF THE ACT. AS SUCH I AM SURPRISED THAT WITHOUT A VALID POWER OF ATTORNEY HOW COME THE LEAR NED AO AT ALL ENTERTAINED THE SAID SHRI SUNIL ARORA AND ALSO MADE AN ENTRY IN THE ORDER SHEET A COPY OF WHICH HAS BEEN PROVIDED TO ME BY ACIT CIR.1(1) BANGALORE. T HE FACT THAT SHRI SUNIL ARORA WAS NOT AUTHORIZED HAS ALSO BEEN TAKEN COGNIZANCE BY THE LEARNED AO IN THE IMPUG NED ORDER AT PAGE NO.2 IN GENERAL AND PARA 1 IN PARTICU LAR. 21) THE RELIANCE PLACED BY THE LEARNED ACIT CIR.1(1) BANGALORE ON SECTION 292BB ALSO CANNOT C OME TO THE RESCUE OF THE REVENUE. IN KUBER TOBACCO PRODUC TS (P) LTD. V DCIT (2009) 18 DTR (DEL.) (SB) (TRIB) 1 THE HONBLE SPECIAL BENCH OF THE DELHI TRIBUNAL HAS HEL D THAT SECTION 292BB INSERTED BY FINANCE ACT 2008 W.E.F. 1 ST PAGE 5 OF 8 ITA NOS.729 & 730/BA NG/2010 5 APRIL 2008 HAS NO RETROSPECTIVE OPERATION AND APPL IES TO AND FROM ASSESSMENT YEAR 2008-09 ONLY. IT IS NEEDLES S TO MENTION THAT THE ORDER OF THE SPECIAL BENCH IS B INDING ON ME AS HELD BY THE JURISDICTIONAL HIGH COURT IN NO KIA CORPORATION V DIT (INTERNATIONAL TAXATION) [2007] 2 92 ITR 22 (DELHI). 22) IN VIEW OF THE DISCUSSION ABOVE IT IS HELD THAT THE NOTICE U/S 143(2) HAS NOT BEEN SERVED ON T HE ASSESSEE WITHIN A TIME FRAME OF 12 MONTHS I.E. BY 31.12.2004. AS SUCH THE VERY ASSUMPTION OF JURISDI CTION FOR SCRUTINY OF THE CASE HAS BECOME BARRED BY LIMITAT ION. ASSESSEE DESERVES TO SUCCEED IN GROUND OF APPEAL NO.1 & 2. 23) I SHALL NOT ADJUDICATE ON GROUNDS OF APPEAL NO.3 TO 9 AS THE SAME WOULD BECOME AN ACADEMIC EXERCISE. THIS IS ON ACCOUNT OF MY DECISION IN GROU ND OF APPEAL NO.1 & 2 WHERE I HAVE HELD THAT THE NOTICE U/S 143(2) WAS NOT SERVED WITHIN A TIME FRAME OF 12 MON THS. ONCE THE VERY ASSUMPTION OF JURISDICTION IS HELD TO BE INVALID EVERYTHING THAT FOLLOWS SHALL ALSO BE ILLEG AL AND UN-SUSTENABLE IN LAW. 24) APPEAL OF THE ASSESSEE IS ALLOWED. 8. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 9. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A ) WAS NOT JUSTIFIED IN HOLDING THAT THE ASSUMPTION OF JURISDI CTION FOR SCRUTINY OF THE CASE WAS BARRED BY LIMITATION. IT WAS SUBMITTED THA T THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT NO NOTICE U/S 143(2) WAS SERV ED ON THE ASSESSEE WITHIN THE STIPULATED TIME EVEN THOUGH IN RESPONSE TO THE NOTICE ISSUED ON 14.12.2004 ONE OF THE REPRESENTATIVES APPEARED ON BEHALF OF THE ASSESSEE ON 24.12.2004 AND REQUESTED FOR AN ADJOURNMENT OF T HE HEARING. IT WAS PAGE 6 OF 8 ITA NOS.729 & 730/BA NG/2010 6 STATED THAT THE ASSESSEE HAD FAILED TO COMMUNICATE THE CURRENT ADDRESS AT BANGALORE TO THE AO IN TIME AND THE ADDRESS WAS FUR NISHED LATER ONLY AFTER THE ASSESSEE WAS REQUESTED TO COMPLY WITH ASSESSMENT PROCEEDINGS. 10. THE LEARNED AR REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND ALSO RELIED ON THE FINDING OF THE CIT(A). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THERE IS NO AMBIGUITY TO CONCLUDE THAT THE NOTICE U/S 143(2) HAS TO BE SERVED ON THE ASSESSEE WITHIN A PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN OF INCOME WAS FILED. THE ABOVE POSITION IS CRYSTAL CLEAR ON READING THE PROVISION OF LAW THE V ARIOUS JUDICIAL PRONOUNCEMENTS AND THE BOARD CIRCULAR NO.549 DATED 31.10.1989. THE JUDICIAL PRONOUNCEMENTS ARE ELABORATELY DISCUSSED IN THE IMPUGNED ORDER OF THE CIT(A) AND HENCE THEY ARE NOT REITERATED HERE. FOR THE ASST. YEAR 2003-04 THE RETURN OF INCOME WAS FILED ON 2.12.200 3 AND HENCE NOTICE U/S 143(2) OUGHT TO HAVE BEEN SERVED ON THE ASSESSEE ON OR BEFORE 31.12.2004 WHEREAS FOR THE ASST. YEAR 2004-05 RETURN OF INCOME WAS FILED ON 30.10.2004; HENCE NOTICE U/S 143 SHOULD HAVE BEEN SERVED ON THE ASSESSEE ON OR BEFORE 31.10.2005 TO COMPLETE THE SCRUTINY ASS ESSMENT/BEST JUDGEMENT ASSESSMENT. THE CIT(A) IN HIS IMPUGNED O RDER HAS CATEGORICALLY FOUND THAT NOTICE U/S 143(2) HAS NOT BEEN SERVED ON THE ASSESSEE WITHIN THE TIME STIPULATED I.E. ON OR BEFORE 31.12.2004 AND 31 .10.2005 FOR THE ASST. YEARS 2003-04 AND 2004-05 RESPECTIVELY. THIS FINDING OF THE CIT(A) HAS NOT BEEN DISPELLED BY THE REVENUE NEITHER DURING THE COURSE OF HEARING OF THE APPEAL NOR BY PLACING ANY MATERIAL ON RECORD. I T IS THE DUTY OF THE PAGE 7 OF 8 ITA NOS.729 & 730/BA NG/2010 7 REVENUE TO ESTABLISH THAT THE SERVICE OF AN ORDER/N OTICE WAS MADE ON THE ASSESSEE HIMSELF OR ON SOMEBODY DULY AUTHORIZED BY HIM IN THAT BEHALF. SIMILARLY THE BURDEN TO PROVE THE DATE ON WHICH THE SERVICE HAS BEEN DULY EFFECTED IS ALSO ON THE REVENUE. WHEN THE ASSESSEE PLEADS THAT HE HAS NOT BEEN PROPERLY SERVED WITH ANY NOTICE IT IS FOR THE D EPARTMENT TO PLACE THE RELEVANT MATERIAL TO SUBSTANTIATE THE PLEA THAT THE ASSESSEE WAS SERVED WITH PROPER NOTICE. AS RIGHTLY POINTED OUT BY THE FIRST APPELLATE AUTHORITY THE RIGHT COURSE OF ACTION FOR THE AO SHOULD HAVE BEEN TO SERVE THE NOTICE BY AFFIXATION U/S 282 OF THE ACT ON THE LAST KNOWN ADD RESS AFTER FOLLOWING THE PROCEDURE PRESCRIBED. THIS WOULD HAVE BEEN A VALID SERVICE OF NOTICE WITHIN THE TERMS OF SECTION 143(2) AND SECTION 282 OF THE ACT. 11.1 THE RELIANCE PLACED BY THE REVENUE ON SECTION 292BB OF THE ACT CANNOT ALSO COME TO ITS RESCUE SINCE THE SPECIAL B ENCH OF THE TRIBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS P. LTD. V DCIT 3 10 ITR (AT) 300 (DELHI) (SB) HAD CATEGORICALLY HELD THAT SECTION 292BB HAS B EEN INSERTED BY FINANCE ACT 2008 W.E.F. 1 ST APRIL 2008 HAS NO RETROSPECTIVE OPERATION AND APP LIES TO AND FROM ASST. YEAR 2008-09 ONLY. THE FINDING OF THE TRIBUNAL READS AS FOLLOWS:- THAT SECTION 292BB COULD NOT BE CONSTRUED TO HAVE RETROSPECTIVE OPERATION AND IT HAD TO BE APPLIED PROSPECTIVELY. SECTION 292BB IS APPLICABLE TO THE ASSESSMENT YEAR 2008-09 AND SUBSEQUENT YEARS. THE ASSESSEE WAS NOT PRECLUDED FROM TAKING ANY OBJECTION PRIOR TO APRIL 1 2008 I.E. UPTO MARCH 31 2008 UN DER SECTION 292BB REGARDING INVALIDITY OF ASSESSMENT OR REASSESSMENT ON THE GROUND OF IMPROPER ISSUANCE OF NOTICE. PAGE 8 OF 8 ITA NOS.729 & 730/BA NG/2010 8 IN THE ASSESSMENT CONCLUDED FOR THE ASST. YEAR 2003- 04 THE AO HIMSELF ADMITS THAT THE AUDITOR WHO HAD APPEARED ON 24.12.2 004 HAD ADMITTED THAT HE HAS NO POWER OF ATTORNEY TO REPRESENT THE CASE AN D HIS WORK WAS LIMITED TO AUDIT U/S 44AB AND FOR THE PURPOSE OF 80HHC. 11.2 IN THE LIGHT OF THE ABOVE REASONING WE ARE O F THE VIEW THAT THERE IS NO VALID SERVICE OF NOTICE U/S 143(2) OF T HE ACT IN ORDER TO COMPLETE THE SCRUTINY ASSESSMENT U/S 143(3)/144 OF THE ACT. HENCE WE HOLD THAT THE ORDER OF THE FIRST APPELLATE AUTHORITY IS CORRECT AN D IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. 12. IN THE RESULT THE APPEALS FILED BY THE DEPARTM ENT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH DAY OF NOVEMBER 2011 SD/- SD/- (N K SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO:- 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONC ERNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR ITAT BANGALORE.